Is Walmart Thinking About a Whole Foods Bid?

Is Walmart Thinking About a Whole Foods Bid?

Is Walmart Thinking About a Whole Foods Bid?

Amazon announced on Friday, June 16, that it will be acquiring Whole Foods (WFM) for $13.7 billion, in an all-cash deal.

"If Amazon steers Whole Foods away from its "whole-paycheck" image (the company recently offered up a discounted Prime subscription for the 40 million-plus adults on food stamps) and/or successfully sells Whole Foods products on-line, then Big Food faces the threat of losing even more market share". It also needed to enter that enormous market, especially if it seeks global domination, because food gets you everywhere.

Wal-Mart, which got a stake in JD.com in the Yihaodian deal, upped its share in the Chinese firm to 12.1 percent in February, having bought online retailer Jet.com in a $3 billion deal past year.

Mackey, who will remain CEO after the deal is complete, spoke about what parts of the Whole Foods business will remain and which are expected to change. Following its explosive growth Amazon came to the conclusion that others might pay to use its vast server infrastructure, and thus was born a range of cloud computing services from Amazon Web Services (AWS) to Elastic Cloud Compute (EC²) and the Amazon Simple Storage Service (S3). The company's warehouses, built for its own goods, are now used by independent sellers.

"We're becoming a giant corporation in the USA", she said. It does well if you live in the right place. The app allows customers to order groceries online and get them shipped to their home. "It's a bit unsettling". Even with the addition of Whole Foods, Amazon accounts for just 4% of US grocery/consumables sales ($45 billion) compared with Walmart/Sam's 18% share ($228 billion), with Kroger at 7%, and Costco and Albertson's/Safeway each at 4%. "We do have an aging population". The company would gain insight on how people shop in stores, in addition to the information it already has on how they shop online.

The upper end of the grocery market is still highly fragmented, with some small local chains existing.

Whole Foods has always focused on its employees and stakeholders, as highlighted in John Mackey's insightful book, "Conscious Capitalism". Antitrust experts however believe the deal will be approved by the Federal Trade commission as Whole Foods is a relatively minor presence in the grocery landscape and Amazon sells comparatively few groceries. "I think you're gonna see Whole Foods Market evolve in leaps and bounds".

With Amazon and Walmart already going head to head, there are other competitors that want to obtain this deal such as Target, Costco, and Kroger.

Gail Levy, who sells HFactor packaged water to stores including Giant's almost 200 supermarkets in the East, has approached Whole Foods about her products and gotten some interest. Most Whole Foods customers have at least one concern about an Amazon takeover, including food quality and ethics; less than a quarter (24.3%) have no concerns. He added that these are likely the higher-income households who tend to buy more expensive brands and cuts of meat. It was the key reason Walmart got into the grocery business in the 1980s, a move that accelerated its shift from a regional chain into the world's largest physical retailer. It also had announced a board shake-up and cost-cutting plan amid pressure from activist investor Jana Partners.

For years, Amazon (amzn) has been the specter looming over retail, as once-dominant department stores and specialty chains fell on harder and harder times.

In the next three to five years and beyond, this acquisition might cause problems for grocery retailers if Amazon uses its seemingly unlimited financial resources to expand stores aggressively. It is a flawless match: Amazon needed stores and Whole Foods needed money.

USA antitrust enforcement has generally looked favorably on deals that reduce consumer prices, and Amazon supporters contend the deal will be good for consumers.

US firms are now looking to play catch up - key as bricks-and-mortar stores are hit by a slowdown and online players battle with tight profit margins and high delivery costs.

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